II 

112TH CONGRESS 

1ST SESSION S. 967 

To establish clear regulatory standards for mortgage servicers, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 12, 2011 

Mr. MERKLEY (for himself, Ms. SNOWE, Mr. REED, Mr. DURBIN, Mr. 

BLUMENTHAL, Mr. INOUYE, Mrs. SHAHEEN, Mr. SANDERS, Mr. 

WHITEHOUSE, Mr. WYDEN, and Mr. AKAKA) introduced the following 

bill; which was read twice and referred to the Committee on Banking, 

Housing, and Urban Affairs 

A BILL 

To establish clear regulatory standards for mortgage 

servicers, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Regulation of Mort5 gage Servicing Act of 2011’’. 

6 SEC. 2. DEFINITIONS. 

7 In this Act, the following definitions shall apply: 

8 (1) ALTERNATIVE TO FORECLOSURE.—The 

9 term ‘‘alternative to foreclosure’’— 


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1 (A) means a course of action with respect 

2 to a mortgage offered by a servicer to a bor3 rower as an alternative to a covered foreclosure 

4 action; and 

5 (B) includes a short sale and a deed in lieu 

6 of foreclosure. 

7 (2) BORROWER.—The term ‘‘borrower’’ means 

8 a mortgagor under a mortgage who is in default or 

9 at risk of imminent default, as determined by the 

10 Director, by rule. 

11 (3) COVERED FORECLOSURE ACTION.—The 

12 term ‘‘covered foreclosure action’’ means a judicial 

13 or nonjudicial foreclosure. 

14 (4) DIRECTOR.—The term ‘‘Director’’ means 

15 the Director of the Bureau of Consumer Financial 

16 Protection. 

17 (5) INDEPENDENT REVIEWER.—The term 

18 ‘‘independent reviewer’’— 

19 (A) means an entity that has the expertise 

20 and capacity to determine whether a borrower 

21 is eligible to participate in a loan modification 

22 program; and 

23 (B) includes— 

24 (i) an entity that is not a servicer; 

25 and 


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1 (ii) a division within a servicer that is 

2 independent of, and not under the same 

3 immediate supervision as, any division that 

4 makes determinations with respect to ap5 plications for loan modifications or alter6 natives to foreclosure. 

7 (6) LOAN MODIFICATION PROGRAM.—The term 

8 ‘‘loan modification program’’— 

9 (A) means a program or procedure de10 signed to change the terms of a mortgage in the 

11 case of the default, delinquency, or imminent 

12 default or delinquency of a mortgagor; and 

13 (B) includes— 

14 (i) a loan modification program estab15 lished by the Federal Government, includ16 ing the Home Affordable Modification Pro17 gram of the Department of the Treasury; 

18 and 

19 (ii) a loan modification program es20 tablished by a servicer. 

21 (7) MORTGAGE.—The term ‘‘mortgage’’ means 

22 a federally related mortgage loan, as defined in sec23 tion 3 of the Real Estate Settlement Procedures Act 

24 of 1974 (12 U.S.C. 2602), that is secured by a first 

25 or subordinate lien on residential real property. 


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1 (8) SERVICER.—The term ‘‘servicer’’— 

2 (A) has the same meaning as in section 

3 6(i) of the Real Estate Settlement Procedures 

4 Act of 1974 (12 U.S.C. 2605(i)); and 

5 (B) includes a person responsible for serv6 icing a pool of mortgages. 

7 SEC. 3. SINGLE POINT OF CONTACT. 

8 (a) CASE MANAGER REQUIRED.—A servicer shall as9 sign 1 case manager to each borrower that seeks a loan 

10 modification or an alternative to foreclosure. 

11 (b) DUTIES OF CASE MANAGER.—The case manager 

12 assigned under subsection (a) shall be an individual who— 

13 (1) manages the communications between the 

14 servicer and the borrower; 

15 (2) has the authority to make decisions about 

16 the eligibility of the borrower for a loan modification 

17 or an alternative to foreclosure; 

18 (3) is available to communicate with the bor19 rower by telephone and email during business hours; 

20 and 

21 (4) remains assigned to the borrower until the 

22 earliest of— 

23 (A) the date on which the borrower accepts 

24 a loan modification or an alternative to fore25 closure; 


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1 (B) the date on which the servicer fore2 closes on the mortgage of the borrower; and 

3 (C) the date on which a release of the 

4 mortgage of the borrower is recorded in the ap5 propriate land records office, as determined by 

6 the Director, by rule. 

7 (c) ASSISTANCE FOR CASE MANAGERS.—A servicer 

8 may assign an employee to assist a case manager assigned 

9 under subsection (a), if the case manager remains avail10 able to communicate with the borrower by telephone and 

11 email. 

12 SEC. 4. DETERMINATION OF ELIGIBILITY FOR LOAN MODI13 FICATION PROGRAM OR ALTERNATIVE TO 

14 FORECLOSURE REQUIRED BEFORE FORE15 CLOSURE. 

16 (a) INITIATION OF COVERED FORECLOSURE AC17 TIONS.—A servicer may not initiate a covered foreclosure 

18 action against a borrower unless the servicer has— 

19 (1) completed a full review of the file of the 

20 borrower to determine whether the borrower is eligi21 ble for a loan modification or an alternative to fore22 closure; 

23 (2) made a reasonable effort to obtain the in24 formation necessary to determine whether the bor25 rower is eligible for a loan modification or an alterVerDate Mar 15 2010 06:34 May 18, 2011 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S967.IS S967

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1 native to foreclosure, as described in subsection (c); 

2 and 

3 (3) offered the borrower a loan modification or 

4 an alternative to foreclosure, if the borrower is eligi5 ble for the loan modification or alternative to fore6 closure. 

7 (b) SUSPENSION OF COVERED FORECLOSURE AC8 TIONS.— 

9 (1) IN GENERAL.—A servicer shall suspend a 

10 covered foreclosure action that was initiated before 

11 the date of enactment of this Act until the 

12 servicer— 

13 (A) completes a full review of the file of 

14 the borrower to determine whether the borrower 

15 is eligible for a loan modification or an alter16 native to foreclosure; 

17 (B) notifies the borrower of the determina18 tion under subparagraph (A); and 

19 (C) offers the borrower a loan modification 

20 or an alternative to foreclosure, if the borrower 

21 is eligible for a loan modification or an alter22 native to foreclosure. 

23 (2) SUSPENSION.—During the period of the 

24 suspension under paragraph (1), a servicer may 

25 not— 


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1 (A) send a notice of foreclosure to a bor2 rower; 

3 (B) conduct or schedule a sale of the real 

4 property securing the mortgage of the borrower; 

5 or 

6 (C) cause final judgment to be entered 

7 against the borrower. 

8 (3) REASONABLE EFFORTS.—A servicer is not 

9 required to suspend a covered foreclosure action 

10 under paragraph (1) if the servicer— 

11 (A) makes a reasonable effort to obtain in12 formation necessary to determine whether the 

13 borrower is eligible for a loan modification or 

14 an alternative to foreclosure, as described in 

15 subsection (c); and 

16 (B) documents that the servicer has not 

17 received information necessary to determine 

18 whether the borrower is eligible for a loan modi19 fication or an alternative to foreclosure before 

20 the end of the applicable period under sub21 section (c). 

22 (4) RULE OF CONSTRUCTION.—Nothing in this 

23 section may be construed to require a servicer to 

24 delay an unavoidable foreclosure, such as foreclosure 


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1 that results from a borrower abandoning the resi2 dential real property securing a mortgage. 

3 (c) REASONABLE EFFORT TO OBTAIN NECESSARY

4 INFORMATION.—A servicer shall be deemed to have made 

5 a reasonable effort to obtain information necessary to de6 termine whether the borrower is eligible for a loan modi7 fication or an alternative to foreclosure if— 

8 (1) during the 30-day period beginning on the 

9 date of delinquency of the borrower, the servicer at10 tempts to establish contact with the borrower by— 

11 (A) making not fewer than 4 telephone 

12 calls to the telephone number on record for the 

13 borrower, at different times of the day; and 

14 (B) sending not fewer than 2 written no15 tices to the borrower at the address on record 

16 for the borrower, at least 1 of which shall be 

17 delivered by certified mail, requesting that the 

18 borrower contact the servicer; 

19 (2) in the case that the borrower responds in 

20 writing or by telephone to an attempt to establish 

21 contact under paragraph (1), the servicer— 

22 (A) notifies the borrower, in writing, that 

23 the servicer lacks information necessary to de24 termine whether the borrower is eligible for a 


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1 loan modification or an alternative to fore2 closure; and 

3 (B) sends the borrower a written request 

4 that the borrower transmit to the servicer all 

5 information necessary to determine whether the 

6 borrower is eligible for a loan modification or 

7 an alternative to foreclosure, not later than 30 

8 days after the date on which the servicer sends 

9 the request; 

10 (3) in the case that the servicer does not receive 

11 from the borrower all information requested under 

12 paragraph (2)(B) on or before the date that is 30 

13 days after the date on which the servicer sends the 

14 notice under paragraph (2), the servicer sends the 

15 borrower a written request that the borrower trans16 mit to the servicer all information necessary to de17 termine whether the borrower is eligible for a loan 

18 modification or an alternative to foreclosure, not 

19 later than 15 days after the date on which the 

20 servicer sends the request; and 

21 (4) in the case that the servicer does not receive 

22 from the borrower all information requested under 

23 paragraph (3) on or before the date that is 15 days 

24 after the date on which the servicer sends the re25 quest under paragraph (3), the servicer notifies the 


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1 borrower that the servicer intends to initiate or con2 tinue a covered foreclosure action. 

3 SEC. 5. THIRD PARTY REVIEW. 

4 Before a servicer notifies a borrower that the bor5 rower is not eligible for a loan modification or an alter6 native to foreclosure, the servicer shall obtain the services 

7 of an independent reviewer to— 

8 (1) review the file of the borrower; and 

9 (2) determine whether the borrower is eligible 

10 for a loan modification or an alternative to fore11 closure. 

12 SEC. 6. BAR TO FORECLOSURE ACTIONS. 

13 (a) IN GENERAL.—Subject to subsection (b), a viola14 tion of this Act shall be a bar to a covered foreclosure 

15 action. 

16 (b) EFFECT OF SUBSEQUENT COMPLIANCE.—If a 

17 servicer is in compliance with this Act, the servicer may 

18 bring or proceed with a covered foreclosure action, without 

19 regard to a prior violation of this Act by the servicer. 

20 SEC. 7. REGULATIONS. 

21 Not later than 90 days after the date of enactment 

22 of this Act, the Director, in consultation with the Sec23 retary of Housing and Urban Development and the Sec24 retary of the Treasury, shall issue regulations to carry out 

25 this Act. 


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1 SEC. 8. REPORT. 

2 Not later than 1 year after the date of enactment 

3 of this Act, the Director shall submit to Congress a report 

4 that contains— 

5 (1) an evaluation of the effect of this Act on— 

6 (A) State law; and 

7 (B) communication between servicers and 

8 borrowers; and 

9 (2) a description of any problems concerning 

10 the implementation of this Act. 

Æ 


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